Don't take us to a cliff edge on cash payments, IoF tells government

Responding to a consultation on cash and digital payments, the Institute of Fundraising says many charities need time to adapt as the role of cash diminishes

Any changes to government policy on using cash should be carefully managed to avoid a "cliff edge" that would create problems for charities, the Institute of Fundraising has said.

In its response to the government’s consultation on cash and digital payments in the new economy, which closes today, the IoF says many charities will need time to adapt as the role of cash diminishes over time.

A survey of IoF members carried out for the consultation response found that, of the 247 respondents, 70 per cent had reported an overall fall in the percentage of overall donations made by cash in the past three years, and 86 per cent expected a further decrease in the next five years.

But the survey found that much depended on the size of the charity: of charities with annual incomes of less than £1m, 75 per cent thought there would be a falls in cash donations in the next five years, while 97 per cent of charities with incomes of more than £10m held this view.

"This may be because larger charities may be more likely to be changing their fundraising activities (and proactively moving away from asking for cash donations), but comments in the survey also point to a potential regional difference, with change in urban areas predicted to come first, before more rural communities," the response says.

And although 74 per cent of respondents said their charity had not yet tried any contactless payment systems to take donations, 72 per cent said they expected to use contactless payment systems in the future.

Again, smaller charities were less likely to see themselves using the technology in the future: 64 per cent, compared with 75 per cent of medium organisations and 78 per cent of larger ones.

"The direction of travel is clear – charities are already seeing a decrease in the percentage of donations given in cash, expect the decrease to continue and the majority think that they will be using contactless payments in the near future," the response says.

But the survey also found barriers to many organisations that wanted to develop their capacity to receive contactless donations. When asked why they had not yet tried contactless payment systems, the most common reason given by respondents was the cost of buying the equipment, 56 per cent, while 23 per cent said they lacked the skills and know-how.

These concerns need to be taken into account by the government, the IoF response says.

"If government takes forward policies which are likely to decrease cash and promote contactless giving, we would like to see consideration given as to how the cost can be reduced for charities (particularly smaller organisations) to adopt contactless payment systems," the response says.

It says cash donations, as well as other payment methods, such as cheques are clearly still important for many charities.

But it adds: "While there is a role for cash, we recognise that this role is changing and likely to continue to decrease in the future.

"As people change their behaviour, charities will adapt and change too – we do not believe that a reduction in the amount of cash in circulation will lead to people being less likely to give to charity; however, they will be giving in new and different ways.

"This requires a longer and managed transition, so government policy should set out a roadmap and manage any transition, rather than impose hard or cliff edge-type policies which could cause concern and difficulties for charities."

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